Neobank Open turns unicorn after fresh funding

Neobanking fintech Open on Monday raised fresh funds as part of its Series D round, catapulting the startup into the unicorn club.

The fundraising was led by Mumbai-based investment firm IIFL. Existing investors Temasek, Tiger Global and 3one4 Capital also participated in the funding round.

With this round, Open is now valued at $1 billion, making it the 100th entrant in India's unicorn club, the company says in a press statement. The startup, however, did not disclose the size of its Series D funding.

The strategic investment from IIFL is expected to help Open accelerate its new product offering on small and medium enterprises (SME) lending, as the platform is gearing up for the launch of three new products aimed at enhancing the capital needs of SMEs apart from its existing SME credit card offerings.

The new products include Open Flo – an innovative revenue-based financing product for ecommerce businesses, Open Settl – early settlement credit offering, and Open Capital – working capital lending offering for SMEs. Open is targeting to disburse $1 billion in lending through the new suite of products on the platform in the next 12 months.

Backed by global investors such as Temasek, Google, Visa, Tiger Global, and Beenext among others, the company has raised over $140 million in funding so far.

Open, which caters to over 2.3 million SMEs, is processing $30 billion in annualised transactions.

The funding will also help Open accelerate its existing product lines Zwitch (embedded finance platform) and BankingStack (enterprise banking solution for banks), drive global expansion and reach over 5 million customers within the next one year, the startup says.

The funds will also be used to strengthen Open’s leadership team and increase the employee base from 500 to 1,000 within the year.

"We see a lot of synergies with IIFL especially on leveraging the lending book, as we are getting ready to launch innovative products like revenue-based financing, early settlement, working capital loan and business credit cards to SMEs on our platform," says Anish Achuthan, co-founder and CEO, Open.

India may see as many as 45 unicorns in the next 12-18 months as more customers move to digital services offered by new-age companies, nudging investors to bet on the country’s growing league of startups, Fortune India reported earlier this year.

According to the Economic Survey 2021-22, the country had 83 startup unicorns with a total valuation of $277.77 billion as of January 14, 2022. India added a record 44 unicorns in 2021, overtaking the U.K. to emerge as the third highest country in number of unicorns after the U.S. and China which added 487 and 301 unicorns respectively in 2021, the survey shows.